Lower Your Mortgage Payments

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Mortgage Modification

How to Lower Your Mortgage Payments

There are a few way in which you may be able to get a lower monthly mortgage payment. Let's start at the beginning and say you haven't bought your home first before we move on to mid mortgage problems. There are many things that you can do to get a lower mortgage. You can shop around and see who gives the best rates, you can try to get the lowest possible principle by negotiating with the owner of the house. This would be particularly easy to do in a "buyers market" because the home value is going down or there is little demand and they may not find someone else for a while.

Now lets say you saved up ahead of time... You can, if you are able to safely do so, pay a 20% down payment and not have to pay PMI (Private Mortgage Insurance). This can lower your mortgage by a few hundred dollars(depending on the size of the mortgage).

Mid Mortgage Lower Payments Through Refinancing

For those of you who are already in a mortgage there are several options as well. One of the most popular and oldest ways to lower your mortgage payment is to refinance. Through refinancing you may be able to extend your mortgage term, thereby reducing the monthly mortgage payments. You could possibly reduce the interest by themselves or in conjunction with the term extension. If you only extend the term of the mortgage, however, you will end up paying more in the end(if you don't pay extra).

If you are in an ARM(adjustable rate mortgage) and your payments are high or are about get higher and you are unable to afford this you can refinance your mortgage and get a fixed rate mortgage.

Finally, with regards to refinancing, you can opt for an interest only mortgage. This will lower the cost of your mortgage temporarily, but interest only normally last 5-10 years and after that the monthly mortgage payments will increase. You are allowed to pay more than the interest and that will lower the principal. Make sure you think this option through thoroughly before proceeding.

Mortgage Modification

There is one more option for those people who want to keep their homes and have a lower mortgage payment. There are several qualifying factors for this option, the most common being "upside down" mortgages and the borrower not having enough money to pay the mortgage. With the first one the house has to be worth a good deal less than what the borrower bought it for. Lenders wont likely modify a mortgage for something like a $10,000 difference in a $200,000 home. Lenders really do not like to lower the mortgage principle because they paid the original mortgage for the house and that money is something they can't get back without the borrower paying them.

Falling on hard times is a little bit more complicated. The lender does stand to lose some money if a borrower defaults on a loan, but if the mortgage is fair it can be tough to negotiate a new mortgage. There are several ways to go about this. Before you start you may want to seek professional help from a mortgage modification business(be careful) or seek assistance(ie Assistance from a HUD-approved housing counselor, which is free). First an estimation of how much you can afford or would like to be paying can be sent in to the mortgage lender along with a letter of hardship and this may open the door to negotiations relatively quickly. The letter of hardship can be sent in first, though, without the estimated amount you can afford, but the lender will want proof that you aren't able to pay and the sooner you get that in the sooner the process can start.

Beyond sending a letter of hardship certain lenders take part in a program called "HOPE for Homeowners" which provides incentives for lenders to modify mortgages. This program is subject to change so be sure to research it to see how much your lender can get. This may help determine how low they are willing to go. If they do participate rethink your proposition and then research and seek government approved or trustworthy counseling or hire a company or person to negotiate on your behalf.

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